Import restrictions for softwood lumber increase ________ and decrease ________, and the cost per protected job is roughly $________ (10,000, 50,000, 1 million, 10 million). (Related to Application 4)

Application 4 THE COST OF PROTECTING A LUMBER JOB APPLYING THE CONCEPTS #4: What are the effects of import restrictions? What is the cost of using import restrictions to protect jobs in the softwood lumber industry? Softwood lumber is subject to import quotas (quantity restrictions) and tariffs (import taxes) that decrease the supply of lumber and increase the price to builders, increasing the price of housing and other products produced with soft lumber. These policies protect roughly 600 jobs in the industry and impose a cost on consumers of roughly $632 million, so the cost per job protected is roughly $1 million per year. A recent study estimates the consumer benefits of relax- ing significant import restraints on a variety of products. The annual benefits would be $1.5 billion for ethanol, $49 million for sugar, $514 million for textiles and apparel, and $215 million for footwear and leather goods. The simultaneous liberalization of trade in all products would generate an annual benefit of $2.6 billion. Related to Exercise 4.5. SOURCES: Federal Reserve Bank of Dallas, The Fruits of Free Trade (2002); United States International Trade Commission, The Economic Effects of Significant U.S. Import Restraints: Seventh Update, 2011.